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20-0925 Friday “Daily Bugle”

20-0925 Friday “Daily Bugle”

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Friday, 25 September 2020

  1. Treasury/OFAC: “Notice of OFAC Sanctions Actions”
  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: (No new postings)
  3. State/DDTC: (No new postings)
  4. Treasury/OFAC: “Issuance of Global Magnitsky GL 2A and Associated FAQ; Publication of FAQ Related to the Government of the Hong Kong Special Administrative Region”
  1. Brunswick News: “Spaceport Lawsuit Filed Against Camden County”
  2. Export Compliance Daily: “China’s Unreliable Entity List Could Complicate Export Control, Sanctions Compliance, Law Firms Say”
  1. Husch Blackwell: “U.S. Moves to Block Conventional Arms Sales to Iran”
  2. Reed Smith: “EU Takes Action over Violations of the UN’s Arms Embargo on Libya”
  3. Wilmer Hale: “China’s MOFCOM Promulgated the Provisions on the Unreliable Entities List”
  4. Winston: “Trump Administration Issues Further Restrictions on Cuba”
  1. FCC Academy Presents: 6-7 Oct; “Designing an ICP” & “Implementing an ICP”
  2. Friday List of Approaching Events: 184 Events Posted This Week, Including 9 New Events
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Find the Latest Amendments Here. 
  3. Weekly Highlights of the Daily Bugle Top Stories 
  4. Submit Your Job Opening and View All Job Openings 
  5. Submit Your Event and View All Approaching Events 

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EXIM ITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a11. Treasury/OFAC: “Notice of OFAC Sanctions Actions”
 
85 FR 60518 – 60520: Notice
* AGENCY: Office of Foreign Assets Control, Treasury.
* ACTION: Notice.
* SUMMARY:
   (i) The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is publishing the names of one or more persons that have been placed on OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List) based on OFAC’s determination that one or more applicable legal criteria were satisfied. All property and interests in property subject to U.S. jurisdiction of these persons are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.
   (ii) The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is publishing the names of one or more persons that have been placed on OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List) based on the determination by the Secretary of State, in consultation with the heads of relevant agencies, that one or more applicable legal criteria were satisfied. All property and interests in property subject to U.S. jurisdiction of these persons are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.
   (iii) The Treasury Department’s Office of Foreign Assets Control (OFAC) is updating the identifying information on its list of Specially Designated Nationals and Blocked Persons (SDN List) for two persons whose property and interests in property are blocked pursuant to Executive Order 13382.
   (iv) The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is publishing the names of one or more persons that have been placed on OFAC’s Specially Designated Nationals and Blocked Persons List based on OFAC’s determination that one or more applicable legal criteria were satisfied. All property and interests in property subject to U.S. jurisdiction of these persons are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.
* FOR FURTHER INFORMATION CONTACT: OFAC: Associate Director for Global Targeting, 202-622-2420; Assistant Director for Sanctions Compliance & Evaluation, 202-622-2490; or the Assistant Director for Licensing, 202-622-2480.

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OGS OTHER GOVERNMENT SOURCES

 
* Treasury/OFAC; NOTICES; Blocking or Unblocking of Persons and Properties; [Pub. Date: 28 Sep 2020] (PDF)
 
* State: NOTICES; Cuba Prohibited Accommodations List [Pub. Date: 28 Sep 2020] (PDF) 
 
* State: RULES; International Traffic in Arms Regulations: Temporary Update to Republic of Cyprus Country Policy [Pub. Date: 28 Sep 2020] (PDF)

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OGS_a23. Commerce/BIS: (No new postings)

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  OFAC has issued Global Magnitsky General License 2A and an updated frequently asked question related to the general license. 
  In addition, OFAC has published a new frequently asked question related to the Government of the Hong Kong Special Administrative Region.

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COM NEWS

NWS_a16. Brunswick News: “Spaceport Lawsuit Filed Against Camden County”

(Source: Brunswick News, 23 Sep 2020) [Excerpts] 
 
  A lawsuit claiming Camden County officials [used the ITAR to] unlawfully withhold public documents about the dangers of potential rocket failures at a proposed spaceport has been filed in Superior Court.  …
  According to the amended lawsuit filed in Camden County Superior Court, the environmental group has been seeking information from conducted studies it says has been withheld that show the impacts of a rocket launch failure including:
  * Launch failure rates.
  * Anticipated areas where rockets or debris would fall in the event of a failure or malfunction.
  * Areas of greatest risk or harm.
  * Estimates of the scope of fire damage.
  * Estimated number of fatalities from a catastrophic launch or landing failure.
  * Potential impacts to nearby fisheries, marshes and the Intracoastal Waterway.
  “After more than seven years, the county continues to keep even the most basic details about this project from the public by violating the law,” said Megan Desrosiers, executive director of One Hundred Miles. “How can Camden communities feel assured that millions of their taxpayer dollars are being spent wisely when they are denied any semblance of transparency?” …
  The county argued for the first time that the federal International Traffic in Arms Regulations and the Missile Technology Control Regime prohibited public release of the information sought by One Hundred Miles.  The county has continued to maintain that position, leading to the lawsuit.
  “Camden County has gone to great lengths to hide the serious risks this project poses to public safety, personal property and coastal way of life,” said April Lipscomb, senior attorney for the Southern Environmental Law Center. “It’s time for the county to stop this pattern of hiding information.”

(Source: Export Compliance Daily, 24 Sep 2020) [Excerpts]
 
China’s so-called unreliable entity list could present compliance challenges for multinational companies and may be used to retaliate against U.S. export controls and sanctions, trade lawyers said. As a result, companies trying to comply with both U.S. and Chinese regulations may have to choose one over the other, risking sanctions from at least one country, law firms said.

COM COMMENTARY

 

* Principal Author: Grant D. Leach, Esq., 1-402-964-5143, Husch Blackwell LLP  
  

  President Trump issued an Executive Order on September 21, 2020 which, effective immediately, imposes secondary sanctions on the transfer and sale of certain conventional arms shipments and the supply of related services to Iran by non-U.S. persons.  This Executive Order follows the current administration’s failed effort to reinstate sanctions and a conventional arms embargo by the U.N. Security Council.  The Executive Order, titled “Blocking Property of Certain Persons with Respect to the Conventional Arms Activities of Iran”, attempts to enforce such sanctions unilaterally by authorizing the U.S. Secretary of State to impose blocking sanctions on any non-U.S. person who transfers conventional arms to Iran or otherwise performs activities to support such transfers.  
  If the U.S. Secretary of State, in consultation with the U.S. Secretary of the Treasury, determines that a non-U.S. person has engaged in any of the following activities, then all of that non-U.S. person’s U.S. property (including property in the U.S., which transits through the U.S. financial system or which is otherwise in the possession of a U.S. person) will become blocked.  U.S. persons and the U.S. financial system will be prohibited from transacting with those:
  • Engaging in any activity that materially contributes to the supply, sale, or transfer, directly or indirectly, to or from Iran, or for the use in or benefit of Iran, of arms or related materiel, including spare parts;
  • Providing Iran any technical training, financial resources or services, advice, other services, or assistance related to the supply, sale, transfer, manufacture, maintenance, or use of arms and related materiel;
  • Engaging, or attempting to engage, in any activity that materially contributes to, or poses a risk of materially contributing to, the proliferation of arms or related materiel or items intended for military end-uses or military end-users, including any efforts to manufacture, acquire, possess, develop, transport, transfer, or use such items, by the Government of Iran or paramilitary organizations supported by Iran;
  • Materially assisting, sponsoring, or providing financial, material, or technological support for, or goods or services to or in support of, any person whose property and interests in property are blocked pursuant to the Executive Order;
  • Being owned or controlled by, or to having acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this Executive Order.
  The Executive Order clarifies that it does not apply to persons “facilitating a transaction for the provision (including any sale) of agricultural commodities, food, medicine, or medical devices to Iran.”
  Following the issuance of the Executive Order, the U.S. Department of Treasury’s Office of Foreign Asset Controls (OFAC) added several individuals and two (2) entities to the Specially Designated Nationals (SDN) list, thereby subjecting the designated entities to the above-described blocking sanctions.  The Iranian entities are Mammut Diesel and Mammut Industrial Group P.J.S. (aka Mammut Industrial Group, Mammut Tehran Industrial Group, or Mammut Industries).
The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) added five (5) individuals to the Entity List who BIS says “played a critical role in Iran’s nuclear weapons development program and continue to work for the Iranian regime.”  By adding these individuals to the Entity List, they are now prohibited from receiving any items or technology that are “subject to the EAR”, which will essentially prohibit any exports or re-exports of U.S. origin items or technology to these individuals.

(Source: Reed Smith, 23 Sep 2020) 
 
 
  On Monday, 21 September, the EU designated three companies involved in the transportation of goods for violating the UN arms embargo in place for Libya: Sigma Airlines, Avrasya Shipping and Med Wave Shipping. The three entities, who are alleged to have transported military material to Libya, are now subject to an asset freeze under the EU restrictive measures.
  Tensions over non-compliance with the UN arms embargo have escalated over recent weeks following the interim UN envoy for Libya, Stephanie Williams, criticising the “blatant” ongoing violations. In the press release which followed the designations, the EU reiterated its commitment to ensuring that the UN arms embargo in Libya is fully respected and stated that these “new listings show the EU’s strategic use of its sanctions regime and ability to react to developments on the ground in support of the political process and to deter past and present perpetrators from further violations”.
  Those involved in Libya trade should continue to monitor developments, as further restrictive measures may follow. In the meantime, effective sanctions specific due diligence and compliance policies remain key to ensuring compliance, particularly in light of the guidance issued earlier this year by the sanctions enforcement bodies in the U.S. and the UK: OFAC and the OFSI.

(Source: Wilmer Hale, 23 Sep 2020)

 
* Principal Author: Lester Ross, Esq., 86-10-5901-6588, Wilmer Cutler Pickering Hale and Dorr LLP 
 
  On September 19, 2020, China’s Ministry of Commerce (MOFCOM) promulgated the Provisions on the Unreliable Entities List (the Provisions). MOFCOM had announced its intention to establish the Unreliable Entities List regime in May 2019 as a countermeasure against U.S. export control enforcement actions targeting Chinese companies, in particular, Huawei.  
  The newly issued Provisions form the legal basis for the actual Unreliable Entities List (Entities List), the initial iteration of which has yet to be released. The Provisions arguably constitute the basis for more comprehensive tit-for-tat retaliation by the Chinese government in response to a series of U.S. Executive Orders and political actions relating to Huawei, TikTok, WeChat, Hong Kong, Xinjiang and Taiwan, as the Unreliable Entities List will include not only foreign companies which boycott or cut off supplies to Chinese businesses, but also organizations, government officials and individuals who are deemed to have challenged China’s conception of its sovereignty or to have harmed China’s national security, which can be interpreted expansively. China may nevertheless move cautiously with respect to releasing and populating the Entities List out of concern that it will depress foreign investment in China.
 
The key features of the Provisions are as follows:

 

(1) Subjects of the Unreliable Entities List

Article 1 of the Provisions provides that the Unreliable Entities List will include enterprises, other organizations and individuals of foreign countries (collectively, Entities) which
  • endanger the national sovereignty, national security or development interests of China; and/or
  • suspend normal transactions with or discriminate against Chinese Entities in violation of normal market transaction principles and cause serious harm to the legitimate rights and interests of Chinese entities.
  Article 7 of the Provisions provides that when determining whether an Entity should be added to the Entities List, the degree of danger to national sovereignty and security, the degree of harm to the interests of Chinese entities, internationally accepted trade rules and other factors shall be considered. 
  It appears the direct targets of the Entities List may be foreign companies which in compliance with U.S. sanctions, foreign investment review and/or export control regimes terminated business relations with Chinese companies, together with those foreign organizations and individuals (such as government or non-government organizations, and government officials) which are deemed to have challenged China’s sovereignty over Hong Kong, Taiwan, or other frontier regions such as Xinjiang, Tibet and South China Sea. The Entities List may include not only the underlying Entity itself, but also its Chinese and overseas affiliates and subsidiaries, together with their officers.
 

(2) What it means to be on the Entities List

Article 10 of the Provisions provides that Entities added to the Unreliable Entities List may be subject to one or more of the following restrictive measures:
  1. Restriction or prohibition from engaging in China-related import or export activities;
  2. Restriction or prohibition from investing in China;
  3. Restriction or prohibition on relevant personnel or transportation from entering China;
  4. Restriction or revocation of relevant personnel’s work permits, status of stay or residence in China;
  5. Fine based on the severity of the harm caused; and/or
  6. Other necessary measures. 
  Open-ended Article 10(6) would afford the Chinese government more latitude to apply additional restrictions and sanctions on listed Entities such as asset freezes and physical detention in China, or conceivably even extraterritorial enforcement actions.  
 

(3) The procedures to be added to and removed from the Entities List

  A Working Mechanism composed of relevant government agencies likely to be housed within MOFCOM will be established to administer the Entities List. The Working Mechanism will have the authority to investigate Entities ex officio or based on suggestions or complaints from other stakeholders, including Chinese companies adversely impacted by restrictive measures imposed by a foreign government. The Working Mechanism will issue an announcement if it decides to launch an investigation. 
  The Working Mechanism has the authority to make inquiries of the relevant parties, consult or copy relevant documents and materials, and adopt other necessary measures to conduct the investigation. These other unspecified measures may give Chinese authorities expansive extraterritorial power to compel information not only from Chinese subsidiaries of Entities but also overseas affiliates of Entities. The Entities have the right to submit statements and defense arguments. 
  The Entity in question may be given time to correct its conduct,  and if the actions have been sufficiently corrected and the harmful consequences eliminated, the Entity may be removed from the Entities List. The Working Mechanism may also consider removing the Entity from the Entities List ex officio based on the actual circumstances or upon the Entity’s application. Such removal shall be publicly announced with immediate effect.
  Chinese parties may also apply to the Working Mechanism (for a license or exemption) to transact with an Entity on the Entities List in special circumstances. Only when such license or exemption is granted may Chinese entities transact with an Entity on the Entities List.
 
Conclusion
  MOFCOM in its accompanying press release emphasized that the Provisions will only target an extremely small number of Entities that have broken market rules or violated Chinese law and will not impose burdens on law abiding and trustworthy foreign companies. When asked if the Provisions constitute retaliation in response to the Executive Orders regarding Huawei, WeChat and TikTok, MOFCOM denied that the Provisions are targeted at particular countries or particular Entities, but rather have been issued to optimize the business environment.
  We believe that the Provisions nonetheless afford the Chinese government new and more explicit tools to retaliate against measures adopted by foreign governments against leading Chinese enterprises and challenging China’s sovereignty over its claims to and policies in peripheral regions like Hong Kong, Taiwan and the South China Sea. In this sense the Entities List constitutes a more formal and legal tool to be used in addition to the less formal instruments of “coercive diplomacy” like intensified customs inspections and detentions of personnel which China has long used as instruments of foreign and commercial policy. 
  While the adoption of the Provisions is motivated in response taken to actions by the U.S., China has historically preferred to impose punitive measures on smaller countries which may be more dependent on China’s favor. The Entities List should therefore be viewed of concern to Entities regardless of their nationality. Moreover, the emphasis on China’s sovereignty as a basis for inclusion on the Entities List indicates that Entities may be vulnerable if they do not conform to China’s then-current political practices, e.g., by failure to indicate on maps and packaging that Taiwan is part of China rather than a self-governing jurisdiction or that most of the South China Sea is Chinese territory. 
  The Entities List is also not restricted to particular industries. Therefore, Entities in education, journalism and other sectors which tend to be more outspoken may be as vulnerable as those in more technologically or capital-intensive sectors.

TE EX/IM TRAINING EVENTS & CONFERENCES

  • Designing an Internal Compliance Program

Tuesday, 6 October 2020 More Info

  • Implementing an Internal Compliance Program

Wednesday, 7 October More Info  
 
* Register for both and take advantage of our discounted price! 

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(Sources: Event sponsors)  
 

Submit your event in the Submission section at the end of this newsletter.  
 
[Editor’s note:  This Daily Bugle Event List has grown so large that we have run out of space to display it, so we are displaying here only the new events in the Daily Bugle, while maintaining a LINK HERE to the full list.]
 

Published every Friday or last publication day of the week. Send events to events@fullcirclecompliance.eu, composed in the below format:
 
# * Date: (Location;) “Event Title”; <Weblink>” Event Sponsor;
 
On-Line:
 

* 29 Sep: “The ABC of FMS“; Full Circle Compliance (FCC) Academy
* 29 Sep: “U.S. Census – Best Practices for Voluntary Self-Disclosures“; Braumiller Law Group PLLC
* 29 Sep: “CBP Detroit Virtual Trade Day“; CBP
* 6 Oct: “Designing an Internal Compliance Program for Export Controls & Sanctions“; Full Circle Compliance (FCC) Academy
* 7 Oct: “Implementing an Internal Compliance Program for Export Controls & Sanctions “; Full Circle Compliance (FCC) Academy
* 20 – 23 Oct: “Complying with U.S. Export Controls“; Commerce/BIS
 
Permanent:
 
* “2020 Encryption Export Controls“; Export Control Webinars

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EN EDITOR’S NOTES

EN_a114. Bartlett’s Unfamiliar Quotations

(Source: Editor)

 

* Felicia Hemans (Felicia Dorothea Hemans; 25 Sep 1793 – 16 May 1835) was an English poet. Two of her opening lines, “The boy stood on the burning deck” and “The stately homes of England”, have acquired classic status.

  – “Strength is born in the deep silence of long-suffering hearts; not amid joy.” 
 
* T. S. Eliot (Thomas Stearns Eliot; 26 Sep 1888 – 4 Jan 1965; was an American-born British poet, essayist, publisher, playwright, literary critic and editor. Considered one of the 20th century’s major poets, Eliot attracted widespread attention for his poem “The Love Song of J. Alfred Prufrock” in 1915, which was seen as a masterpiece of the Modernist movement. He was awarded the Nobel Prize in Literature in 1948, “for his outstanding, pioneer contribution to present-day poetry”.)
  – “Let’s not be narrow, nasty, and negative.” 
  – “Half of the harm that is done in this world is due to people who want to feel important. They don’t mean to do harm. But the harm does not interest them.”
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The official versions of the following regulations are published annually in the U.S. Code of Federal Regulations (C.F.R.), but are updated as amended in the Federal Register.  The latest amendments are listed below.
 
Agency 
Regulations 
Latest Update 
DHS CUSTOMS REGULATIONS: 19 CFR, Ch. 1, Pts. 0-199.

 

5 Apr 2019: 84 FR 13499:

Civil Monetary Penalty Adjustments for Inflation. 
DOC EXPORT ADMINISTRATION REGULATIONS (EAR): 15 CFR Subtit. B, Ch. VII, Pts. 730-774. 
22 Sep 2020: 85 FR 59419 Additions of Entities to the Entity List and Corrections of entries on the Entity List.

DOC FOREIGN TRADE REGULATIONS (FTR): 15 CFR Part 30.   24 Apr 2018: 83 FR 17749: Foreign Trade Regulations (FTR): Clarification on the Collection and Confidentiality of Kimberley Process Certificates.  
DOD NATIONAL INDUSTRIAL SECURITY PROGRAM OPERATING MANUAL (NISPOM)

: DoD 5220.22-M. Implemented by Dep’t of Defense. 

18 May 2016: Change 2: Implement an insider threat program; reporting requirements for Cleared Defense Contractors; alignment with Federal standards for classified information systems; incorporated and cancelled Supp. 1 to the NISPOM (Summary here.)  
DOE ASSISTANCE TO FOREIGN ATOMIC ENERGY ACTIVITIES: 10 CFR Part 810.    23 Feb 2015: 80 FR 9359: comprehensive updating of regulations, updates the activities and technologies subject to specific authorization and DOE reporting requirements. 
DOE EXPORT AND IMPORT OF NUCLEAR EQUIPMENT AND MATERIAL; 10 CFR Part 110.  

15 Nov 2017, 82 FR 52823: miscellaneous corrections include correcting references, an address and a misspelling.

 
DOJ ATF ARMS IMPORT REGULATIONS: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War. 
14 Mar 2019: 84 FR 9239: Bump-Stock-Type Devices.

DOS INTERNATIONAL TRAFFIC IN ARMS REGULATIONS (ITAR): 22 C.F.R. Ch. I, Subch. M, Pts. 120-130. 

29 Jul 2020: 85 FR 45513 Extension to Certain Temporary Suspensions, Modifications, and Exceptions due to Corona Virus.  The latest edition of the BITAR is 29 July 2020.  

 
DOT FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR): 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
Update of Cuban Assets Control Regulations.
 

 

 
USITC HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTS, HTSA or HTSUSA), Revision 8.

1 Jan 2019: 19 USC 1202 Annex.
  – HTS codes for AES are available here.
  – HTS codes that are not valid for AES are available here.

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